Science & technology minister Derek Hanekom

Beleaguered micro-satellite manufacturer SunSpace may be absorbed into Denel Dynamics, part of defence and arms manufacturer Denel. Started by a group of University of Stellenbosch students, SunSpace had a difficult and uncertain three years, filled with unfulfilled government promises and contracts that failed to materialise.

Space has been identified as one of the department of science & technology’s five grand challenges — the others are the bioeconomy, energy, climate change and human and social dynamics. Satellite production has also been touted by both the departments of science & technology and trade & industry as a high-technology manufacturing niche that South Africa could exploit.

In 2010 and 2011, cabinet approved, in principle, the purchase of a 55% to 60% equity stake in the company, which was responsible for South Africa’s R25m pathfinder satellite Sumbandila. But last year, cabinet did an about-turn, saying government should not buy a stake in the insolvent company, but should rather try to absorb the skills. Initially, it was thought that SunSpace’s new home would be the South African National Space Agency.

There have been rumours that it would be absorbed into Denel Dynamics. Officials have remained mum about the details, but last week at the science budget vote in parliament, Democratic Alliance spokesman on science and technology Junita Klopper-Lourens confirmed that Denel was a possible home for SunSpace when she insisted that science & technology minister Derek Hanekom give details about the move.

Hanekom said: “SunSpace is a private company … and it developed very, very serious human capabilities, but, unfortunately, they did not get the international contracts we hoped they would.”

He said that buying an equity stake would “not be a good expenditure of taxpayers’ money. We are rescuing it, but it is a question of how we rescue it.”

He added that the company was developing a business rescue plan. The only thing that SunSpace MD Bart Cilliers would confirm was that the plan would be completed by the end of the month. He said that he had signed a nondisclosure agreement with the department of science & technology and could not comment on the possible absorption into Denel Dynamics.

Last year, when asked about the government’s decision not to buy into the company, Cilliers queried whether “the department was simply walking away from the 23-month salary arrears incurred by the personnel and the guarantees provided by the shareholders in keeping the [human] capability intact while the government decision-making process was being executed”.

When contacted for comment, Denel Dynamics said that it had been instructed not to talk to the press, and told the Mail & Guardian to speak to the department of science & technology.

The minister said that a number of possibilities were being explored. Initially it was expected that the space agency would absorb these skills. In October the agency said that it was exploring ways in which it could be integrated.

This was a valid assumption because South Africa has started work on a new satellite that will join the African Resource Management Constellation. Four African countries — South Africa, Nigeria, Algeria and Kenya — have committed to contributing at least one satellite to the constellation, which will monitor Africa’s resources, such as agriculture, water, climate and human settlements. This year, R272m has been set aside for the construction of ZA-ARMC1, which will be South Africa’s contribution.

However, even if SunSpace remained afloat as a private company in expectation of ZA-ARMC1 contracts, there is no guarantee that it would get them.

Last year, there was an outcry against the Square Kilometre Array South Africa project office, after a disgruntled businessman said that it was reneging on its promises to boost local business and was giving contracts to foreign firms.

Heinrich Bauermeister’s company, MMS Technology, which designed and made South Africa’s prototype XDM and KAT-7 telescopes, had not been awarded the R632m contract to build the antennas for the country’s Square Kilometre Array precursor, the 64-dish MeerKAT radio telescope.

Square Kilometre Array South Africa said at the time that, because of treasury regulations as well as local content stipulations, it had to award the tender to the most competitive bidder, otherwise it would be an irresponsible use of taxpayers’ money.